Real Estate Investment Articles

New investors almost always ask “Should I
get my real estate license?” or “Should I become a
real estate agent?” It’s almost immediately followed
up with a comment similar to … “I was talking to or
I saw on TV and <so and so> said…… I don’t
need to be a real estate agent to be a real estate
investor”. Most of the time, they’ll add, “…in fact,
it makes things more difficult for you as a real
estate investor.” (Look at the head this noise is
coming out of… we’ll address this subject in a bit.)

Does this sound familiar? It makes me
cringe when new investors who are hungry for
knowledge are getting this kind of advice. These
comments and attitudes are supported by the
infomercials on TV announcing you can be
successful without being licensed. This one subject
ruffles so many feathers in my noggin.

Let me share a couple of my mistakes and
growing pains as a new investor.

Remember when…. I got started as an
aggressive investor and really began to “see the
light” (BENEFITS) of buying houses, renting them,
and letting somebody else pay for them. Yeah, a
little work here and there, but it sure beat the heck
out getting paid $12.00 an hour to work an “off duty
job” after hours. Off duty jobs for police officers
were plentiful, especially those who had take-home
marked patrol cars. Utility companies with projects
on busy roadways loved having a police car with
lights flashing to slow traffic and make a jobsite
safer for their workers. Bad apartment communities
would hire off duty police to patrol their apartment
community to help get rid of the undesirables… it
worked.

You must understand the environment I was
involved in at the time. As a uniformed patrol
officer, I was assigned and rode a very active and
busy beat. It included the housing projects
commonly referred to as “the bricks”. (The
residents called it the “bricks” as well)

Now, travel to my lifestyle at this time.
Arrive for “roll call” at 11:45pm and get off at
7:45am the following morning providing everything
was in order. What kind of people are you dealing
with during these hours? For the most part, we
were dealing with” tax-eaters”. Most “tax payers”
were horizontal (sleeping) during these hours. Yes,
on occasion, you could find taxpayers working
these late hours. My point is I usually dealt with
folks who weren’t very responsible. The Jerry
Springer types and I was the problem solver. This
resulted in many trips to the jail, along with many
court appearances. If you locked somebody up, you
ended up with a subpoena to go to court.

Well, this is where part of my real estate
troubles began. Keep in mind, I was going to court
almost every morning at 9 am. Our courthouse is
the busiest building in our entire state, as far as
traffic count of people. A typical morning in court
may involve me having to appear for 3 to 6 different
cases, all scheduled for 9am. For example, imagine
being scheduled to appear in 3 different court rooms
at the same time… 9am.

You develop relationships with attorneys on
both sides of the fence. There are attorneys
representing “the commonwealth” (good guys) and
there are other attorneys representing the bad guys.
Many of these cases were discussed and remedied
with simple solutions in what was called the
“conference room” adjacent to the courtroom. If
you’d developed a reputation as a good police
officer with common sense, you were labeled good
to the system among the attorneys. Therefore, any
kind of a “deal” considered for a defendant, the
attorneys, as a professional courtesy, would usually
ask for your permission on the proposed deal before
running it through the system.

I have no intention of rambling on about
police work here. It’s important you understand the
environment my daily activities involved. In dealing
with tax eaters on a daily basis, prosecutors, defense
attorneys, and only the criminal side of the court
system, a warped perspective of reality was almost
a guaranteed harmful side effect to me as a beginner
investor. I’m not quite sure how to describe it
exactly, but after spending HOURS daily in the
courthouse with attorneys, another court case didn’t
amount to a hill of beans. I was there already for
hours every day anyway. Maybe your job and
position puts you in a position of authority as well.

So, back to real estate… I’m the new
investor. I felt like Beavis and Butt Head. My light
bulb went off and I realized I could benefit better
for the long haul by focusing my after hours efforts
on real estate investing instead of off-duty jobs. I
began buying houses and renting them. I vividly
recall in the beginning, my closing attorney at the
time, Hank, would ask “Do you want title insurance
for this property you’re buying?”

I interpreted his question almost as an insult.
He doesn’t know who I am. Remember, I’m a good
cop, well respected, who’s in court every day and
with an understanding of how the system and
attorneys work (or so I thought). My answer to
Hank was NO, I’m not wasting my money on title
insurance. That’s what I pay you for. I believed he
was selling insurance for himself in case he didn’t
do a good job. My attitude was phooey on this
money making scheme on his part. I’d simply go
after Hank if he screwed up on my title exam.

Needless to say, he was baffled and I was
stubborn by displaying my Bullwinkle Syndrome

(named after my little sister who is a know-it-all). I
was just too stupid to realize there was a lot I didn’t
know about real estate.

So, as I purchased more properties, I
discovered I could make more money and buy
properties cheaper if I got my real estate license.
The money part alone was enough to motivate me
to enroll in the school and get my license. My
objective was not education. The challenge was to
become a real estate agent FAST so I can buy
properties cheaper by collecting commissions when
buying properties for myself.

Now here goes “Mr. Know It All” investor
(me) enrolling in the grueling boring, mundane
school for real estate agents. I didn’t really need to
learn this stuff. I just wanted to pass the test and get
my license to buy houses cheaper. This school is
designed to groom folks to pass the state’s exam to
become a licensed agent. Although I can’t
remember exactly, I’m guessing I had 30-40
properties at the time. I was already on the road to
financial independence!

RUDE AWAKENING!!!!

Long story short, after the first class or two,
I discovered how much I didn’t know. Let’s use the
analogy to Checkers and Chess, the board games.
Pay attention to this one. As a homeowner and
having purchased several investment properties, I
felt I was already qualified as a knowledgeable
investor.

Here’s a simple version and getting to the
point quickly. It ties right in with Checkers and
Chess. They both use the same game board. I was a
checker player. As a checker player, I’d see the
veteran investors who are CHESS Players. The
checker player honestly believes they are a chess
player too, because they own investment property
just like the veteran investors. The new investor
expects to be almost automatically accepted into the
inner circle of veteran investors. The checkers
player tries to participate in a conversation with the
chess players. The chess players are discussing
strategies and techniques with phrases such as “how
to make an extra $5,000 by moving the rook and
bishop to a place behind the pawn.”

The eager checker player, not realizing their
own ignorance, asks the chess player “what’s a
rook?” or “What’s a bishop?” The chess players
look in amazement at each other in total disbelief
and frustration. Inside their noggin, the chess
players are saying “How can you discuss strategies
or techniques with this bozo when he doesn’t even
know and understand the pieces and parts to the
game.” The checker player immediately picks up
on the attitude exhibited from the chess players as a
selfish, “you’re not allowed in this group.”

Major, major miscommunication occurs.
The checker player is baffled and thinks the chess
players are “clickish” and refuse to share any
information about strategies and techniques.

The real lesson learned is you must learn
and understand the pieces and parts to this game
called real estate investing BEFORE you can play
effectively. After learning the pieces and parts,
(rook, bishop, knight, pawn, etc.) and you happen
across another group of chess players discussing
strategies, you’ll be in a better position to absorb the
techniques because you already know the pieces
and parts.

So, back to real estate school. Thank
goodness I humbled myself enough to accept my
discovery of how much I didn’t know. Just because
I could buy property and spend hours in the
courthouse every day, didn’t make me an expert.

While in school, I discovered the importance
of title insurance. Remember me blasting my
closing attorney with an attitude if something is
wrong with the title, I’d go after him? I was
ABSOLUTELY WRONG!

In our state, our closing attorney runs a title
exam by researching courthouse records; however,
there’s a catch with real estate. You can legally own

real estate WITHOUT having the deed recorded!
What? This is mind boggling.

For example. Billy Bob buys a house and his
name is on his deed. Billy Bob gets married. Billy
Bob wants to sell his house. You buy it by having
him sign a deed over to you on the hood of your
truck. Sounds proper, right? FALSE, you’ve already
set the stage for major mistake. Believe it or not, his
wife, whose name is not on the deed anywhere,
MUST sign off also transferring title to you
although her name is nowhere on his deed. Little
things like this can be different in every state.

I was shocked to learn this in real estate
school. In just a class or two, I realized I was very,
very, lucky nothing had blown up on me. I realized
how much I didn’t know, and how valuable and
powerful education is with successful investing.

Just a short time after completing this
school, my wife wanted a bigger nicer home. I
captured a deal involving an estate, purchased it,
rehabbed it, and made it our home. I purchased title
insurance on this property because I finally
understood the protection it offers. My attorney was
thrilled I finally saw the light. This very same
property, the heirs got into a pi#$%$ing contest,
sueing each other and me for having purchased the
house so cheap. In summary, this resulted in a
lengthy lawsuit. Guess what? My title insurance
picked up the tab of all of the legal expenses. We
won only because the title insurance covered the
legal expenses. Without title insurance, I would be
holding the bag for all of my legal expenses even if
I won the lawsuit, which we did.

So after a couple of real life examples: Should you
get a real estate license? Let’s look at the benefits
for you as an investor vs. the baggage some veteran
folks say come with being licensed.
BENEFITS:
.. learning the pieces and parts of real estate
.. ability to understand techniques faster because

you have a solid foundation of education
.. as a buying tool, you’ll have access to MLS,

Multiple Listing Service in your town. This is
the database of all properties listed for sale by
real estate agents. It’s also a powerful tool to
quickly learn market values.

9 You may receive commissions on properties
you purchase depending on the arrangement
with your broker.

9 As a selling tool, you may list your own
properties on the MLS.

9 Most communities require continuing education
courses if you’re licensed. Although many may
say this is a pain, it’s still education.

9 You’ll simply discover how much you didn’t
know.

9 Powerful opportunity to have real estate agents
work for you and put you at the TOP on their
buyers list.

9 What you learn in this school will stay with you
your whole investing career. You’ll be able to
grasp new creative investing ideas faster
because you already have a solid foundation to
build upon.

9 Keep in mind, as an investor, you’ll be labeled a
“professional” with or without a license. You
are the one who decided to become an investor.
If you are ever in any kind of lawsuit, including
eviction court, you will be almost automatically
tattooed a real estate expert simply because you
are trying to act like one.

CONS:

9 Annual fees and licensing. (In my town it’s
approx $850 annually, including errors and
omissions insurance)

9 You must disclose to your sellers you’re
licensed and buying for investment and/or you
intend to make a profit from the purchase of
their property. (This is the one a lot of anti-getyour-license folks complain about. What’s
wrong with it? It simply covers your butt.)

9 Complaints of paperwork. For the most part,
only if you are representing a buyer or seller is
the paperwork cumbersome. It’s cumbersome
because you are their agent representing their
interests. The forms to fill out are designed to
protect both you and the consumer.

9 If you’re the buyer or the seller, most of the
paperwork is gone because you’re representing

yourself. You must simply disclose you are

licensed.

So, the next time you hear someone say “You
don’t need a license to be an investor.”, look at the
head the noise is coming out of. Do you want to be
like them when you grow up as an investor? ALL of
my mentors and investors I admired not only were
licensed, but actually continued with more
education to become a broker. If you’re just getting
started or you want to really begin cranking your
investments, getting your license won’t hurt you.

I’m encouraging you to get the EDUCATION,
not the license. But, how can getting your license
hurt you? If you plan on buying one property a year,
it may not benefit you to have your license active.
You may choose to escrow your license. If you plan
on cranking it seriously and buy a few houses a
year, having your license is a good thing.

Remember the person who said having your
license is a bad thing? Do you really want to be like
that person when you grow up? I have my broker’s
license today and maybe one day when I slow
down, I may escrow it to save $800 a year. Right
now, it’s still worth every single penny!

Enroll in school. Get the education. Knowledge is
your power. Learn the pieces and parts.

Varsity and Pro Level One on One
Coaching Students (if not licensed or previously
attended school) must go to real estate school
after their second session before they can
schedule their third coaching session. They’re a
little baffled and confused at first, but all are
100% in agreement attending the school is a
definite benefit and advantage to their game plan
for investing. The pieces and parts have been
identified, explained, and it’s time to start the
investing game.

Keep …CRANKING IT 24-7!

Mike Butler

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